Japan's Jera sells first LNG resale cargo to South Korea

TOKYO (Reuters) - Japan’s Jera Co, the world’s biggest importer of liquefied natural gas (LNG), has re-sold an LNG cargo to South Korea, marking the first actual delivery to a customer outside of Japan, a crucial step toward expanding its trading business.

Jera agreed to resell about 60,000 tonnes of LNG to the Gwangyang terminal in South Korea for December delivery to a storage tank that trading house Itochu Corp has leased from Posco, Jera’s Senior Executive Vice President and Chief Fuel Transactions Officer, Hiroki Sato, told Reuters in an interview on Monday.

The company procured the LNG through one of its three long-term purchase contracts for Indonesian supply, said Sato.

“We want to make this an opening move to expand Jera’s marketing and trading operations,” he said. “We are in talks on similar deals with buyers in Europe and Asia and aim to clinch more deals by the end of the year.”

The deal was done on a competitive price to Asia’s spot market, he said.

Jera, a joint venture between Tokyo Electric and Chubu Electric, has an annual offtake of 40 million tonnes of LNG.

Sato said Jera wants to raise the volume it sells to other firms at home and abroad to 3 to 4 million tonnes a year, or 10 percent of total LNG trading volumes, by 2030 to offset declining domestic consumption.

“We would never want to drop our billboard as the world’s top LNG buyer,” said Sato. “We aim to achieve at least 10 percent by 2020, and possibly as high as 20 or 30 percent by 2030.”

The company currently has contracts to supply cargoes to domestic firms such as Shizuoka Gas and Inpex Corp.

Jera remains a strong proponent of removing destination clauses that prevent buyers under long-term contracts from reselling cargoes to third parties. Japan’s Fair Trade Commission is investigating whether the clauses hurt competition and is exchanging information with the government on their impact.

Sato, who won the first destination-free contract in Asia in 2000 when he worked for Chubu Electric, said Jera would not do business with sellers who insist on the clauses.

He added, however, it is not in talks with long-term sellers to remove them and is instead awaiting concessions from sellers such as offers to extend long-term contracts in return for dropping the clauses.

Additional reporting by Jane Chung in Seoul; Editing by Christian Schmollinger